U.K. regulator said to join CFTC in ISDAfix probe

Probe widens...

The U.K. Financial Conduct Authority has started an inquiry into how the so-called ISDAfix rate is set in British pounds, widening a price-manipulation probe into benchmark interest-rate swaps that began in the U.S.

The FCA is working with the U.S. Commodity Futures Trading Commission and is in the early stages of its review, according to two people familiar with the matter, who asked not to be named because the inquiry is ongoing. The London-based regulator hasn’t opened a formal investigation, one of the people said.

The British regulator’s review comes after the CFTC issued subpoenas to current and former brokers at ICAP Plc in Jersey City, New Jersey, the International Swaps & Derivatives Association and as many as 15 Wall Street dealers as part of its probe of the dollar-denominated rate, Bloomberg News first reported April 8. ISDAfix rates help determine everything from interest on annuities to borrowing costs on bonds linked to skyscrapers.

The FCA, previously known as the Financial Services Authority, began looking into manipulation of the London interbank offered rate in 2009 after the CFTC requested its assistance the prior year. The British agency opened a formal investigation of that rate in early 2010, leading to Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc being fined more than more than $2.5 billion over the past year for rigging Libor, a global benchmark for $300 trillion of securities.

Chris Hamilton, a spokesman for the FCA, declined to comment as did Steve Adamske, a CFTC spokesman.